Oracle Earnings To Set April Earnings Bias In Software (ORCL, CRM, VMW, MSFT)

On Wednesday afternoon, we’ll get to see earnings out of Oracle Corp. (NASDAQ: ORCL). The estimates for the enterprise software leader from First Call are $0.30 EPS on $5.42 billion in revenues.  Next quarter estimates are $0.44 EPS on $6.74 billion in revenues, and next quarter also marks the fiscal year-end. Estimates for fiscal May-2008 are $1.27 EPS on $22.12 billion in revenues. Estimates for fiscal May-2009 are $1.45 EPS on $24.64 billion in revenues.

Analysts have an average price target north of $25.00, although its 52-week trading range is $17.89 to $23.31.  Up until the first of march, it looked like shares of Oracle were wanting to test their 52-week lows.  Shares have since come up $1.00.  This last rally got shares above the stock over its 50-day and 200-day moving averages, which are $19.85 and $20.50 respectively.

We won’t use options for any guide until Wednesday because the volatility has been high and their is now a much longer time value since options expire April 18. 

Perhaps more important than just its earnings and guidance will be how the company affects the rest of the software sector.  For starters, now that VMware (NYSE: VMW) has seen a 50% haircut, many analysts and investors still wonder what Oracle’s virtualization plan will really be.  Salesforce.com (NYSE: CRM) has also seen its shares hold up since it last reported, and it is often thought of as "mini-Oracle" in the sector.  Microsoft Corp. (NASDAQ: MSFT) is also the other stock to watch in software as these two are routinely compared in business and enterprise levels.

Jon C. Ogg
March 24, 2008